Bermuda insurance giants ACE Ltd and XL Capital Ltd will between them bear over $1 billion of the claims from the terrorist attacks in New York and Washington, both companies announced yesterday.

This is one fifteenth of the estimated total cost of the US disasters, which Moody's credit rating agency estimated at $15 billion.

The ACE group, which has a broad portfolio in both reinsurance and insurance, said yesterday its third-quarter earnings would be cut by about $400 million due to claims from the destruction of New York's World Trade Center and the Pentagon.

And yesterday evening XL Capital issued a statement that it expected claims to be between $600 and $700 million, according to their latest estimates.

Both companies have said that they were well-placed to be able to pay all the claims and both said they were in good financial positions. XL and ACE join US insurers Berkshire Hathaway Inc., Chubb Corp. and American International Group Inc. in acknowledging exposure to insurance claims related to the World Trade Center attack. Several European insurers and reinsurers have also said they will see claims.

Overall, a variety of types of insurance claims are likely to affect dozens of insurers worldwide. Brian Duperreault, chairman and chief executive officer of ACE Ltd., said: "We are assessing the impact on ACE as we must, and we are in an excellent position to weather this catastrophe."He said that an event of such "unprecedented magnitude" and would have "significant negative impact" on the company's third quarter results.

"As a result of these events, we estimate that third quarter net operating income, after tax, will be reduced by approximately $400 million."

XL said that based on initial loss reports and estimates, XL "preliminarily anticipates" having claims of "approximately $600 million to $700 million" of net reinsurance recoveries stemming from the attacks on the World Trade Center and other related events.

Brian O'Hara, president and chief executive officer of XL, said: "This estimate remains subject to change as additional information comes to light."

Claims are expected to arise mainly from the company's aviation, property and business interruption insurance and reinsurance coverages, the company said.

"For our shareholders these events obviously will have a significant negative impact on XL's short-term earnings for the third quarter of 2001, but we are highly confident about our company's future prospects and financial strength."

Jerry de St Paer, executive vice president and chief financial officer of XL said: "With regard to private placement of senior debt securities due to settle Friday, XL has decided not to proceed with this transaction in view of the dislocation of the financial markets caused by the World Trade Center attack.

"The financing is not needed to meet our anticipated liquidity needs, including in connection with the United States."

Mr. Duperreault said that all ACE offices in the US, with the exception of the space occupied in the vicinity of the World Trade Center, are open for business. XL's offices are further up town and were evacuated after the blast. Both companies said all their staff were accounted for as far as they were aware.

US insurance giants Chubb Corp, which offers corporate property insurance, said it had significant property exposure at the World Trade Centre, but that reinsurance should limit its pre-tax losses to $100 to $200 million.

Chubb said it is exposed to both property and businesses housed in the towers that collapsed. The company also said that it would pay customers' claims under business interruption, accident and workers' compensation coverages, but it was unable to immediately quantify the potential exposure for these losses.

Munich Re, the world's largest reinsurer, said claims would be "considerable" but would not threaten its financial stability.

Swiss Re, the world's second largest reinsurer, said its exposure was "completely inestimable" so far.

In Britain, Lloyd's of London insurance market, whose member syndicates handle many US and aviation insurance policies, is also likely to see large losses.

The American Insurance Association said it could not identify which of its members would be most affected. Sean McManamy, director of public affairs for AIA said: "The coverage on those properties is multi-layered. No-one insurer could or would face all that exposure."